When PAEs are not patent trolls

Recently, Joaquin Almunia, VP of competition policy at the European Commission, took both Nokia and Samsung to task for their behaviors in regards to patent litigation. In a speech, Almunia fired a warning shot across the bow of Nokia, indicating his concerns that the tech company was beginning to act like a patent troll. But, as Tim Worstall points out in a piece he wrote for Forbes, there is such a thing as a patent-assertion entity (PAE), which is not necessarily the same thing as a patent troll.

Almunia cites statistics that show just how bad the patent troll problem is in the United States, but he seems to be using the terms PAE and troll interchangeably. The fact of the matter is that a PAE is any company that chooses to enforce its patents through licensing or litigation. This could include, for example, universities, which often hold many patents that they do not use for, say, manufacturing.

In addition, big technology companies often have thousands upon thousands of patents (IBM, for example, racked up more than 6,000 last year alone). As such, these companies might not be actively using a particular patent, but they certainly have the right to defend such patents in court if they feel another company is infringing.

The key difference, according to Bill Sorrell, is an economic one. True trolls use threats or intimidation to squeeze money out of companies, either by targeting downstream users or counting on the cost of settlement being far less than the cost of litigation. But not all PAEs engage in this kind of behavior, and Joaquin Almunia should take some time to note and acknowledge the difference.